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Misperceptions of grocery advertising.

Research into consumer shopping problems shows that high food prices are a primary concern to consumers (Claxton and Ritchie 1978). The major source of consumer information about food prices is weekly newspaper advertising of specials by grocery store chains. The importance of this price information to consumers is exemplified by the fact that 55 perrcent of shoppers check newspaper advertisements before purchase (cf., Wilkinson et al. 1980). Because a food item is advertised does not mean it is reduced in price. Research by Wilkinson and Mason (1974) found between 13 and 15 percent of items advertised at any one time were not reduced in price. Mason and Wilkinson (1978) reported that 48 percent of all grocery items advertised over a ten-week period were at the regular price.

Other research by Wilkinson, Mason, and Paksoy (1982) found that consumers are reluctant to respond to advertised food specials. Some consumers simply do not believe that items are on sale. Given the percentage of nonreduced advertised food specials, consumers may indeed be acting rationally. Findings such as these explain why consumers are generally skeptical of advertising (Calfee and Ringold 1988). Other possibilities why consumers do not respond to advertised specials are found in Liefeld and Heslop (1985). They found that consumers heavily discounted the ordinary selling price of the good when only presented with sale price information. When no reference price is given in grocery advertising, consumers may find it difficult to determine if the advertised price is reduced and hence if they can save by purchasing the item.

The study has two distinct contributions. It simultaneously measures advertised savings and consumers' perceptions of average savings and it determines if consumers who believe advertised brands to be of better quality have different perceptions about perceived savings, than consumers who do not believe advertised brands are better. To date no study has simultaneously examined the advertising practices of a large retail chain and compared these to consumer perceptions of that advertising. This survey method lacks controls usually used in experimental price investigations (e.g., Wilkinson, Mason, and Paksoy 1982), and does not give insight as to what causes perceptions.

This study is meant to be exploratory so that insight is gained as to what consumers' price and advertising perceptions are in their shopping environment. Measurements were made of (1) the percentage of items advertised on sale, (2) the percentage of consumers who thought the items were on sale, (3) how much the consumer is actually saving, and (4) consumer perceptions of saving on advertised items.

CONTENT ANALYSES OF ADVERTISEMENTS

AND COMPARISON TO REGULAR STORE PRICES

Newspaper advertisements from Safeway Canada were collected over a two-week period starting November 29, 1988, and ending December 14, 1988. Safeway has 35 percent market share in the survey area and represents a major North American food retailer (Financial Times 1987). All grocery products advertised in the time period were coded as to regular and advertised prices. Regular prices were obtained by the researchers after price checking each advertised item in the store during the test period. Regular price was defined as the price the item sold for immediately before advertising in the flyer. In most cases, individual items are not priced so special tags are put on shelves over regular prices. Prices underneath the special tags were noted by the researcher. A total of 308 items were advertised by Safeway Canada in the data collection period.

Advertised items were categorized using guidelines from content analysis (Kassarjian 1977). Food groups were formed to coincide with other groupings used for tracking consumer food expenditure patterns (e.g., Statistics Canada 1984). The food groups were dairy products, eggs, bakery products, cereal products, meat and pultry, fish and seafood, fats and oils, beverages, fresh fruit and vegetables, and miscellaneous grocery products. Miscellaneous grocery products included canned and dried fruit, canned vegetables, frozen food, and prepared food. This breakdown of food groups is far more extensive than the three groups (meats, poultry, and fish; fresh fruits and vegetables; and other) used by Wilkinson and Mason (1974). By expanding the number of food groups to ten, consumers can be more articulate as to their perceptions about advertising. Also, the ten food groups more accurately represent how consumers spend their food dollar (Zaichkowsky and Ho 1990).

The percentage difference between regular and advertised prices was calculated by comparing the advertised price with the store's regular price on each item then averaging the percentage change for the food group and time period (Table 1). Fifty miscellaneous items (e.g., paper products, cleaning agents, pet food, snack items, and baking needs) were advertised in the test period at an average actual reduction of 20 percent per item. Consumers were not specifically

[TABULAR DATA OMITTED]

asked about the advertising of these miscellaneous goods due to the number of separate and distinct categories resulting from their classification.

Of the other 258 items, regular prices could not be determined for 52 food items. Most of the 52 items were specialty bakery and meat items, not in regular stock. For example, apple fritters, fresh pumpkin pie, mince pie, fresh veal tongue, heart, and calves' liver are typical of advertised products which were not regularly stocked but available seasonally or as supply permits. Of the remaining 206 items, 201 (97.6 percent) were reduced in price. The markdown by food category ranged from 13 percent for fish and seafood to 35 percent for canned and prepared food. The average overall markdown for these "regular" food specials was 23 percent. The results for each product category over the test period are reported in Table 2.

CONSUMERS' PERCEPTIONS OF ADVERTISING

A total of 300 shoppers were surveyed over the two-week time frame at three different Safeway stores in the Greater Vancouver area by the same trained interviewer. Interview times were staggered so that 100 respondents were inverviewed in the morning (10:00 a.m. to noon), 100 were interviewed in the afternoon (2:00 to 4:00 p.m.),

[TABULAR DATA OMITTED]

and 100 were contacted in the evening (6:00 to 8:00 p.m.). Days of contact were also staggered so that 100 people were interviewed on Monday, Tuesday, or Wednesday; 100 were interviewed on Thursday or Friday; and 100 were interviewed on Saturday or Sunday.

Respondents were approached as they were about to enter a store and asked if they would take five minutes to participate in a university research project on grocery store advertising. One shopper after another was approached in each two-hour interview period until 20 complete questionnaires were obtained. Approximately ten questionnaires were completed per hour. No record was kept of those refusing to participate as very few people denied the interview. However, a subjective assessment indicated approximately a 15 percent refusal rate. Persons reluctant to participate included those whose spouses normally completed shopping activities; those too busy; and those who "never answer questionnaires." The refusal rate tended to become higher around dinner time (6:00 p.m.), when shoppers seemed to be more in a hurry than other times of the day. Refusal to participate did not appear to be confined to persons of particular ages, sex, or nationality.

Sample

Sixty-five percent of the 300 interviewees were female and 35 percent were male. The average family income was $30,000 per year. Sixty percent of the sample reported some post-secondary education. When the demographics of the sample were compated to the demographics of the population in the area (Statistics Canada 1988), the sample was found to overrepresent women and persons with more education. On average, the adult population of the area has 51 percent females and 49 percent males, 40 percent of the population over 19 has some post-secondary education, and median household income is about $30,000.

The majority of respondents (56 percent) has lived in the area for over six years and 64 percent were shopping in the supermarket closest to their homes. Chi-square analyses of sample by time of participation showed that males were more likely to shop on Saturday or Sunday while females were more likely to shop on Thursday or Friday. Evening shoppers were more likely to be younger and of higher income.

Food Price Advertising Users

Of the 300 consumers interviewed, 263 (87.7 percent) reported receiving grocery advertising flyers. More women reported receiving food flyers than men ([X.sup.2] = 5.57, df = 1, p<.01), more older people reported receiving flyers than younger persons ([X.sup.2] = 17.07, df = 5, p<.01), and persons with higher incomes reported receiving flyers more than those with lower incomes ([X.sup.2] = 15.3 df = 5, p<.01). There were no significant differences in education level, length of residence in the area, or whether they currently lived in the area among advertising recipients.

When the 263 receivers of grocery advertising were questioned regarding the frequency at which they read food flyers, 52 people (20.2 percent) reported never reading food flyers. Of the remaining 211 (79.8 percent) respondents, 84 (31.6 percent) sometimes; 35 (13.3 percent) usually; 27 (10.3 percent) most of the time; and 65 (24.7 percent) always read food flyers. Adding those respondents who report usually, mostly, and always using food advertising, 42 percent of the total sample might be classified as using food advertising before purchase. The figure jumps to 63 percent if those who sometimes use grocery flyers are included. This might be compared to the figure of 55 percent of all shoppers who check newspaper advertisements before purchase reported in Wilkinson et al. (1980).

Use of grocery store advertising was measured by adding scores on four, five-point Likert questions, how often do you (1) read flyers you receive? (2) use flyers to compare prices among stores? (3) use flyers for developing shopping lists? and (4) compare flyers to determine specials in different stores? The scale points are (1) never, (2) sometimes, (3) usually, (4) mostly, and (5) always. The Cronbach alpha was. 79 for the four variables. It was determined women use flyers more than men (10.08 versus 8.58, t = -2.97, p<.01) and older women more than younger women (F = 3.5, p<.01). There was no significant difference in food flyer usage by family income of the women or how long they lived in the area. Therefore, older females use food price advertising most in their shopping.

Consumers who reported receiving weekly food flyers were asked "What percentage of the items advertised are reduced in price?" and "Of those items reduced in price, how much is the customer saving on average?" The responses to these questions are in Table 3. Only 18.6 percent of the respondents felt that 75 percent or more of the

TABLE 3

Overall Perception of Price Saving
 Advertised Items on Sale
Percent of Items N Valid %
100 13 5.4
75-99 32 13.2
50-74 76 31.4
25-49 70 28.9
0-24 51 21.1
No Response/Don't Know 21
Don't Receive Flyers 37
 300 100.0
 Customer Is Saving
Percent of Saving N Valid %
Less Than 5 48 20.0
5-10 127 52.9
11-15 43 17.9
16-20 16 6.7
21-25 5 2.1
More Than 25 1 0.4
No Response/Don't Know 23
Don't Receive Flyers 37
 300 100.0


advertised items were actually reduced in price, while in fact 97.6 percent of regular food items advertised in that period were reduced in price.

Respondents were also asked what percentage can be saved for each good product category advertised. Respondents' answers ranged from nine to 60 percent on different product categories. Average perceptions of markdowns are summarized in Table 2 along with actual savings advertised in the test period. There were significant differences (p < .01) in all ten food categories with actual percentage markdowns by the retailer always exceeding the percentage savings perceived by consumers.

Perceived Quality of Brands Advertised

Respondents who reported receiving food advertisements were also asked if advertsied brands were of better quality than those not advertised. Sixty-six percent of shoppers disagreed that brands advertised were of better quality, while only 14 percent agreed that they were. Twenty-one percent neither agreed nor disagreed with the statement. Those that either agreed or disagreed on the quality of advertised brands were grouped and compared on their responses to reported shopping behavior and demographic characteristics (Table 4). Consumers who thought advertised brands were of better quality reported greater use of food flyers to select groceries; using food flyers to locate sales in different stores; using food flyers to compare prices; and had lower education and family incomes.

Therefore, a comparison, of those who think advertised brands are of better quality than consumers who do not, provides some insight into the minority of shoppers who use food advertising to shape their purchases and might be more willing to change stores or "chase bargains."

[TABULAR DATA OMITTED]

DISCUSSION AND SUMMARY

Content analyses of Canada Safeway's grocery advertising during the survey period indicate that almost all regularly carried advertised items (97.6 percent) were reduced in price. This finding contrasts sharply to previous analyses reported in Wilkinson and Mason (1974) and Mason and Wilkinson (1976; 1978) on grocery advertising in the 1970s by U.S. stores. They found that 25 percent to 48 percent of products featured in national chain grocery advertisements were not actually reduced in price. This dramatic difference could be due to the advertising practices in Canada versus the United States, changes in advertising practices in the last 15 years, different sampling of retail outlets, or different methodology. It cannot be determined why the difference was found, but the researchers are confident that the advertising practices of Safeway Canada in the sample area are correctly measured and reported.

Consumers in the sample greatly underestimated the percentage of advertised items actually on sale. Over one-half the sample thought less than 50 percent of items advertised were actually reduced from their regular prices, when, in fact, almost all items advertised were on sale. This finding supports Calfee and Ringold's (1988) view on consumers' skepticism of advertising.

Reasons for consumers' underestimation of price claims in advertising have been addressed through consumers' perceptions of price information (e.g., Liefeld and Heslop 1985; Jacobson and Obermiller 1990). It may be that price promotion has become so common in many product categories that the sale price may represent the norm. This study only gives a snapshot of the frequency at which items went on sale, but certain items may "regularly" go on special. For example, Kraft Parkay margarine was advertised in week one and week three for $2.39 per unit (3 pounds). The nonsale price in week two was $3.18. The temporary price reduction may be so frequently offered, that it lowers the consumers' future reference price for the brand (Jacobson and Obermiller 1990). The consequences is that consumers will underestimate nonsale price or perceive sale price as regular selling price.

When the actual percentage markdown of prices was calculated, it was found that advertised products were reduced an average of 23 percent during the test period. Only ten percent of grocery advertisement readers had accurate perceptions of product markdowns. The majority of readers (73 percent) thought most products to be reduced only by ten percent. The widest gap occurred for the category of canned or prepared foods. On average these products were reduced 35 percent, while consumers felt they were saving 13 percent of the regular prices. It seems consumers err on the side of self-protection in their perception of advertising.

This misperception of saving may also be due to the consumer heavily discounting the ordinary selling price of the good when only presented with sale price information. In an experimental price study involving durable goods, Liefeld and Heslop (1985) found the presence of sale price information alone lowered respondents' estimates of the ordinary selling price significantly more than when the same sale price was presented with regular or manufacturer's list price. Consumers seem to be suspicious of sales to the point of seriously underestimating actual market price.

This discrepancy betwen actual and perceived savings might offer some insight as to why consumers are reluctant to respond to advertised food specials (e.g., Wilkinson, Mason, and Paksoy 1982). Some consumers simply do not believe that the item is on sale. Of the consumers who do believe the item is on sale, they appear not to believe the amount of the savings and may not purchase the item if not currently needed.

The minority of consumers who seem to be most receptive to grocery advertising are those who believe that advertised brands then to be better quality than brands not advertised. The question of whether ot not there is a correlation between advertising and product quality was investigated by Rotfeld and Rotzoll (1976). Although their methodology was not directly comparable to grocery store advertising, they did find a generally positive relationship for national brands and advertising. Therefore this minority of consumers who heavily use advertising to guide their purchasing may be following the best strategy for their food dollar.

Limitations and Implications

In no way can the findings be generalized to all Canadian advertising practices or to all Safeway advertising. Advertising is set on a regional basis, therefore the results may not be generalizable past the immediate reach of the store's advertising. However a large sample of consumers was obtained to be confident about the generalizability of advertising perceptions to the area. Consumers underestimate the informative nature of advertisements and perhaps that is why they are skeptical of their usefulness. Another caveat to this research is that advertising of one store chain and the consumers' perceptions of advertising in general were measured. The researchers are confident that subjects who reported receiving flyers did receive flyers from the test store. they might also have been exposed to flyers from other stores, but because most shoppers were at the store closest to their homes, it is felt their perceptions to be mainly based on Safeway advertising.

The implications are for retailers to improve the consumers' perception of their advertising practices. One way may be to advertise both nonsale and sale prices to provide reference prices for consumers. The study by Liefeld and Heslop (1985) found that manufacturers' list price and regular price statements did not mislead consumers but led them to be more accurate in their price perceptions. Other support for reference prices is provided by Blair and Landon (1981). They reported consumers generally do not accept a reference price at face value, but make higher attributions of savings than they would if the reference price were not presented.

Another possibility is for the retailer to also advertise the percentage saving on the item being offered. While the consumer may be skeptical of the savings (Mobley, Bearden, and Teel 1988), there is no evidence that this skepticism is greater than the misperception of saving when no information is given. Another possibility is to provide the future price of the product after the sale period as done by Nordstrom's (cf., Jacobson and Obermiller 1990). This way consumers can incorporate the future price into their reference price.

REFERENCES

Blair, Edward A. and E. Laird Landon (1981), "The Effects of Reference Prices in Retail Advertisements," Journal of Marketing, 45 (Spring): 61-69.

Calfee, John E. and Debra Jones Ringold (1988), "Consumers Skepticism and Adversiting Regulation: What Do the Polls Show?" in Advances in Consumer Research, Volume XV, Mike Houston (ed.), Provo, UT: Association for Consumer Research: 244-248.

Claxton, John D. and J. R. Brent Ritchie (1978), Consumers' Perceptions of Prepurchase Shopping Problems, volum 1, Consumer Choice Research Program Working Report, Consumer and corporate Affairs Canada.

Financial Times (1987), "Report on Market share" (October 26): A10.

Jacobson, Robert and Carl Obermiller (1990), 'The Formation of Expected Future Price: A Reference Price for Forward Looking Consumer," Journal of Consumer Research, 16(March): 420-433.

Kassarjian, Harold H. (1977), "Content Analysis in Consumer Research," Journal of Consumer Research, 4(June): 8-18.

Liefeld, John and Louise A. Heslop (1985), "Reference Prices and Deception in Newspaper Advertising," Journal of Consumer Research, 11(March): 868-876.

Mason, J. Barry and J. B. Wilkinson (1976), "Mispricing and Unavailability of Advertised Food Products in Retail Food Outlets," Journal of Business, 49(April): 219-225.

Mason, J. Barry and J. B. Wilkinson (1978), "Addendum: Are Supermarket Advertisements Designed to Deceive Customers?" Journal of Advertising, 7(Winter): 56-59 and 67.

Mobley, Mary F., William O. Bearden, and Jesse E. Teel (1988), "An Investigation of individual Responses to Tensile Price Claims," Journal of Consumer Research, 15(September): 273-279.

Rotfeld, Herbert J. and Kim B. Rotzoll (1976), "Advertising and Product Quality: Are Heavily Advertised Products Better?" The Journal of Consumer Affairs, 10(Summer): 33-47.

Statistics Canada (1984), "Summary and Selective Detailed Average Weekly Food Expenditure by City, 17 Cities, Canada 1984," in Family Food Expenditure: 14-17.

Statistics Canada (1988), Census Tracts, Canada 1986: Profiles, Vancouver Part 1 and Part 2, Ottawa.

Wilkinson, J. B. and J. Barry Mason (1974), "The Grocery Shopper and Food Specials: A Case of Subjective Deception?" The Journal of Consumer Affairs, 8(Summer):30-36.

Wilkinson, J. B. and J. Barry Mason (1978), "Unavailability and Mispricing of Advertised Specials: The Food Shopper's Knowledge, Experience and Response, The Journal of Consumer Affairs, 12(Winter): 355-363.

Wilkinson, J. B., J. Barry Mason and Christie H. Paksoy (1982), "Assessing the Impact of Short-term Supermarket Strategy Variables," Journal of Marketing Research, 19(February): 72-86.

Wilkinson, J. B., J. Barry Mason, Christie H. Paksoy, and Richard M. Durand (1980), "Confidence and Price Knowledge: The Case of Advertised Food Specials," in Advances in Consumer Research, Volume VII, Jerry C. Olson (ed.), Ann Arbor, MI: Association for Consumer Research: 772-775.

Zaichkowsky, Judith Lynne and Lap Shing Ho (1990), "A Comparison of Grocery Advertising Allocation and Food Budget Expenditures," in Marketing, Volume 11, Part 3, John Liefeld (ed.), Administrative Sciences of Canada: 410-416.

Judith Lynne Zaichkowsky is Associate Professor of Marketing, Simon Fraser University Burnaby, BC: and Deborah Patricia Sadkowsky is Marketing Support Coordinator, ACT Computer Services.

This paper is based on the second author's MBA project at Simon Fraser University. The authors thank John Liefeld for many helpful comments on an earlier version of this paper. They also wish to thank Jean Last and Betty Chung for their careful preparation of the manuscript.
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Author:Zaichkowsky, Judith Lynne; Sadlowsky, Deborah Patricia
Publication:Journal of Consumer Affairs
Date:Jun 22, 1991
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